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To: Richard Mazzarella who wrote (51033)	4/2/2000 4:18:00 PM
From: William Harvey	Respond to of 116762

Here are a couple items for the gristmill: Equity mutual funds picked up the lion's share of investors' money in February, $39.1B. Between March 25 and March 31, $44.3B in stock held by insiders was now legal to sell because of IPO lockup expiration (including 395m shares of Williams Communication at $46 on March 29). You can check my math at ipolockup.com This coming week will bless us with only $8.8B in new insider money on the market. This week's Up and Down Wallstreet's column in Barron's highlights the Federal Home Loan Bank System (FHLB). Here's some reasons to worry about the FHLB: "This is the least visible but by no means the least important of the so-called government-sponsored enterprises, the most prominent of which are Fannie Mae and Freddie Mac. The GSEs, as they're called, have lines of credit with the Treasury; but their combined borrowings last year of some $7 trillion dwarf the $2 trillion of the Treasury itself. The FHLB flies pretty much under the radar screen, and its reports are issued only after a sizable lag (the '99 annual, for example, is due in May). It's estimated that the system was leveraged 21-to-1 at yearend. It boasts assets of $531 billion and derivatives of $410 billion (the notional value of "interest-rate exchange agreements"). In the most recently reported nine months, margins were a meager 24 basis points on interest-bearing funds. Like the S&Ls in the 'Eighties, the FHLB borrows short and lends long. Its '99 borrowings encompassed over $3 trillion in consolidated obligations, or COs. These are mostly overnight funds that are constantly being rolled over. Despite the 45% rise in advances in the first nine months of last year, spread income rose only 17%. That means margins must be getting squeezed. The FHLB's derivative position is increasingly under water. Last reported in the '98 annual, the system had a $1.7 billion unrealized loss on some $382 billion in derivatives. A bill recently introduced in Congress that would remove the government's lines of credit to the FHLB and the other GSEs. The legislation isn't apt to become law this election year. But 2001 could be a different story."